I’ve worked with some extraordinary chief executives who have achieved the
seemingly impossible… leaders who re-energized their franchise development by checking their egos and biases at the front door. I’ve also worked with leaders who, by sidestepping hard challenges, crippled their system’s growth. Too often unwillingness to deal with internal forces limits an organization’s potential. What is the difference between winning and losing leadership? Here are examples I have personally witnessed:
Lessons in building a better franchise
Money Mailer, a national direct mail franchisor, grew to more than 400 franchises in its first 20 years. But as with nearly every franchise, the company eventually hit some pretty rough waters in its life cycle. Money Mailer was reeling in the early 90’s from an exodus of senior staff following two turbulent years of significant franchise losses fueled by disgruntled, struggling owners.
The President immediately pulled out all stops to revive the organization. The franchise operation had to be re-examined and re-engineered. He packed his bags and met with franchisees throughout the country, successfully gaining their input, support and participation. New executive staff and consultants were hired to assist in what many considered a “Mission Impossible” campaign.
I learned in working with this great leader and his “reborn crusaders” that achieving the impossible is possible. Within 18 months his leadership strategy turned a hemorrhaging franchise from negative growth to a 600 percent increase in new franchise sales. The executive team pulled off an amazing victory gaining buy-in from his franchisees, employees, and customers. He saved a sinking ship to build a much better ship.
Avoiding the pain brings no gain!
Common management traps can ambush healthy franchise growth. A high-end landscaping company with successful branch offices throughout the U.S. decided to franchise in smaller markets where owner-operators made much better business sense than branch locations. Unfortunately, the franchising model wasn’t succeeding as planned, so the founder asked for consulting assistance to help turn the situation around.
Several meetings were cancelled within the few weeks. The founder finally admitted that his president didn’t want the hassle of dealing with these “franchise stepchildren.” “He really doesn’t care for or have time or energy to deal with them.” The pain wasn’t worth the gain, and the founder backed off from battling with the president, who, incidentally, was married to his daughter!
You must shatter the walls of resistance
I’ll never forget trying to convince the corporate legal counsel of a 350-unit service franchise to add Financial Performance Representations to their Franchise Disclosure Document. Their franchisees’ profitability was extremely impressive and certainly would be a key attraction to qualified candidates considering this franchise opportunity.
“Do you enjoy fishing?” was the initial response to my suggestion! I was taken aback, but it became clear this attorney wasn’t about to rock the boat since he was retiring next year. The franchise would have to develop earnings claims on someone else’s watch. The CEO should have stepped in, ripped the fishing rod from his fantasies, and instructed him to publish earnings claims in their documents. But he didn’t. Their less impressive competitors that produced FPRs probably smiled their way to the bank!
A multi-concept retail franchise I formerly consulted ignored six months of alarming market studies and franchisee interviews. Research revealed one of their concepts should immediately stop franchising. A problematic change had occurred in the marketplace and was hammering their unit economics. Franchisee satisfaction was tanking as technological improvements and price reductions no longer allowed their owners to compete in metropolitan areas. The concept screamed for re-engineering, with desperate pleas to do so from loyal, victimized franchisees. Rather than take corrective action, the executives ignored repairing the structural problem. They continued to waste marketing dollars and attempted to recruit more franchisees doomed for failure. The dying concept was sold several years later to a new owner who re-invented the franchise and began rebuilding the brand.
Ready, set, grow!
Realize dramatic increases
Radio Shack soared in the late ’90s, transforming shrinking stores to extraordinary unit growth by completely repackaging their franchise program and successfully partnering in small markets with complementary retail concepts. In recent times the iconic company again faces the task of rejuvenating their brand. Once more leadership must swiftly respond to change, as it’s the catalyst for tomorrow’s system growth and profitability.
Enjoy new strength and vitality
Everyone loves to win. New success sparks greater enthusiasm, confidence, loyalty, and passion for growing franchise organizations. It’s always a thrill when you can enjoy the victories on the journey to greatness. Problems remain, but are much more manageable when your energized team is rising up with you, not against you. You can see it in their eyes and watch it in their swagger. What a difference a day makes!
Rally the troops to the cause
A former senior development executive with a 350-unit personnel franchise masterfully recognized that “buy-in” from support services was essential to accelerating her department’s sales growth. She was experiencing difficulty in getting contracts prepared for approved franchise candidates. As we know, time kills deals: documents must be prepared quickly and delivered for signature by the new franchisee. One day of delay is one step closer to a lost sale, whether it’s from buyer’s remorse or visiting Uncle Bill the accountant. There always are naysayers lurking around the corner, lusting to squash a franchise deal. This senior executive sat down with the resistant employee causing the roadblocks. She enthusiastically shared how great it was that the employee was processing more contracts, because more franchise sales meant they would both personally profit from higher company stock values. The employee’s hot button zoomed from red to green, and from then on agreements zipped back to the executive’s desk.